ASX Stock Market Advice: Which Bank?
With the major banks accounting for 25% of the ASX 200 you can argue that they also account of 25% of total brokerage available to brokers. Trading banks is an essential part of broking, persuading people to buy and sell banks is a foundation activity for commission generation.
Is it any surprise then that the brokers never say “Buy and hold” which for many income focused retiree investors is probably the only advice they have needed since the banks listed.
Instead brokers will constantly change recommendations to generate trade (and change them back six months later) and they are constantly picking between the banks, making comparisons and preferring one bank over the other, which results in that immortal commission generator, a recommendation to switch from Bank A to Bank B (can you hear the faint cackle of brokers laughing in the background?)
I don’t think anyone is smart enough to pick between the banks in the short-term and the sensible recommendation is to admit that at any one time one of them will be outperforming and at other times the other ones will. In which case, for the long-term income investor, you might just as well buy all four in equal measure and be done with it.
Or just pick one, they are after all a homogenous mass of very similar stocks with very similar long-term drivers.
But for those of you that would like an answer to the question “Which Bank?” – here are charts of the performance of each bank relative to the bank sector. These tell you which bank – in hindsight – you should have picked.
But what you will notice in here is that the answer to “Which Bank” is obvious. See if you can spot it.
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